BILL ANALYSIS �
SB 586
Page 1
Date of Hearing: August 17, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 586 (Pavley) - As Amended: August 15, 2011
Policy Committee: Banking and
Finance Vote: 7-3
Public Safety 5-2
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill restricts the issuance of signature stamps by
state-chartered banks and credit unions and increases the fines
associated with certain elder abuse violations. Specifically,
this bill:
1)Provides that a bank or credit union shall only issue a
signature stamp to an existing accountholder under specified
conditions.
2)Requires a bank or credit union that issues a signature stamp
to an account holder to inform the account holder of the risks
associated with the loss, theft or misuse of the signature
stamp, and his or her rights and responsibilities as a stamp
holder.
3)Increases fines for financial abuse, abuse and willfully
causing or permitting an elder or dependent adult to suffer
under circumstances or conditions likely to produce great
bodily harm or death of an elder or dependent adult and
provides, in certain instances, the increased fine amounts
shall be allocated to the adult protective services agency, or
equivalent elder abuse prevention agency, of the county
prosecuting the offense. Generally the fines are doubled, the
existing range of maximum fines for the various offenses is
$1,000 to $6,000, which is increased to $2,000 to $12,000.
FISCAL EFFECT
The Department of Financial Institutions indicates minor,
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absorbable costs.
There could be increased revenues for local elder abuse
programs. However it is unclear how frequently the maximum
fines would be levied and if there would be increased revenues.
The additional 280% penalty assessments for fines serve to
significantly increase the amount owed by the offender.
Increasing the fines does not mean that offenders have the means
to pay, especially after the possible costs of a trial and
restitution. Judges may resist using the new maximum if there
is not a demonstrated ability of offenders to pay the fine and
penalty assessment.
According to information supplied by Los Angeles District
Attorney's Office, the Elder Abuse Section filed 113 new
financial elder abuse cases and 76 new physical or neglect elder
abuse cases for a total of 189 new elder abuse prosecutions in
2010. In that same period, the Elder Abuse Section achieved
convictions in 96 financial elder abuse cases and 73 physical or
neglect elder abuse cases for a total of 169 convictions for
elder abuse. If one assumes that there are about 300 cases
filed annually statewide and the offenders in 10 percent of the
cases are charged under the new higher maximum penalties
established by this bill, depending on the nature of the
violation, this could increase fine revenues by about $250,000.
The number could be larger or smaller depending on the
violations charged and if the offender can actually make the
payments.
COMMENTS
1)Purpose . According to the author, this bill seeks to help
provide basic consumer protections against the fraudulent use
of signature stamps by establishing safeguards against the
fraudulent use of signature stamps which are often used for
banking purposes by individuals with physical limitations.
The author also states that this bill seeks to deter all forms
of elder and dependent adult abuse by doubling the fines
associated with these crimes. The author argues that in light
of the budget deficit in California and the accompanying cuts
of the last several years, it is crucial that funding be
maintained for those agencies that investigate and prevent
elder and disabled abuse. To accomplish that goal this bill
allocates the increase in fines to County Adult Protective
Services agencies for prevention and investigation.
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2)Background . Signatures indicate the signer's intent and
exercise of discretion. State law allows a mark to be
affixed as a signature for a person who cannot write, as long
as it is witnessed and signed by the witnesses to the mark.
The mechanics of making the mark are less important and
usually a signature stamp can be used. A signature stamp can
help those who have not learned to write, but also those
people who experience sight loss or another disability. The
signer can create the facsimile using the stamp or can
authorize someone else to use the stamp.
Anecdotal information suggests that relatively few banks or
credit unions offer signature stamps and customers using them
generally are business account holders. Among the users are
those with a disability. Disability Rights California
estimates that approximately 30,000 disabled persons in
California possess signature stamps.
3)Limitations of the bill . Signature stamps can be acquired
from numerous sources other than financial institutions. This
bill would not address the interaction between a customer and
a financial institutions if the customer used a signature
stamp acquired from somewhere other than the bank or credit
union. Additionally, the requirements on banks and credit
unions do not address the actual usage of the stamp, only its
issuance. Finally, the restrictions on the issuance of these
signature stamps would only apply to California chartered
banks and credit unions, meaning that customers banking with
national banks, such as Wells Fargo, Bank of America and Chase
would not have to meet the bill's requirements.
4)Penalties and Assessments. As counties and local governments
have less revenue due to budget constraints, more of the cost
of prosecuting criminal offenses is being passed on to the
defendants. Under existing law, there are approximately 280%
in penalty assessments on every fine, greatly increasing the
amount a violator may have to pay. These assessments are in
addition to any restitution or any other required fees.
5)Support. According to the Congress of California Seniors,
"Unfortunately, financial fraud and other abuse schemes
against elders and disabled individuals who need assistance
with the maintenance of their financial concerns has become
easier due to new technologies. Additionally, in light of the
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massive structural budget deficit in California and the
accompanying budget cuts of the last several years, it is
equally crucial that funding be maintained for those agencies
that investigate and prevent elder and disabled abuse."
6)Opposition. According to the California Bankers Association,
the bill establishes compliance challenges that do not help
customers as signature stamps are provided as a courtesy to a
limited number of customers and this bill may result in
decreasing the number of banks that use them. They argue the
use of a signature stamp is already a difficult process for
banks to monitor and becomes even more complicated in a world
of increasing electronic transactions as signature stamps are
completely indistinguishable from facsimile signatures and can
be a compliance problem when using remote deposit capture,
which is the ability to deposit a check into a bank account
from one's home or office without having to physically deliver
the actual check to the bank. If a bank cannot determine the
difference between a signature stamp and a facsimile
signature, the bank may have additional burdens on monitoring
the account. They also note that the bill applies only to
state-chartered banks, which establishes an unleveled playing
field for state-chartered community banks.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081